The RICS/AACE (Association for the Advancement of Cost Engineering) U.S. Construction and Infrastructure Survey for the first quarter results show a significant deterioration in market sentiment. Having increased firmly during the final quarter of 2019, total workloads fell in Q1, with the net balance deteriorating from +45% to -12%.

By sector, private industrial and commercial workloads suffered the most noticeable quarterly declines, dropping 17% and 16% respectively. At the other end of the scale, the feedback pointed to a more resilient trend in public residential construction, as workloads reportedly edged slightly higher throughout Q1 as a whole.

In the infrastructure sector, workloads posted a net increase of just 5% in Q1, down from an increase of 54% in the prior quarter. Within this space, workloads on harbors, road, and rail projects saw the steepest declines over the quarter. In contrast, respondents reported that activity continued to rise (albeit at a moderated pace) in the communications and airports sectors.

There also seems to be a split between changes in workloads for new projects and those for repair and maintenance work, the survey reports. While the former experienced a noticeable fall during Q1, the latter has held up better, at least for now.

Nevertheless, overall profit margins were reported to have fallen in Q1, following a steady trend in Q4. Fifty-six percent of survey participants viewed financial constraints as a critical impediment to market activity, while 65% cited a shortage of skilled labor.

“It is clear that professionals expect governments to boost infrastructure spending on the road to economic recovery,” said Sean Ellison, senior economist at RICS. “This will provide a ray of light amid the gloomier outlook for the sector, perhaps pointing to a way out of the current downturn.”
Twelve-month expectations were downgraded across all categories compared to Q4. For infrastructure, the net balance of respondents expecting an increase in workloads over the year ahead fell to just 5%, sharply lower than 63% last time.

“COVID-19 has had an unprecedented impact on the construction and infrastructure industries, resulting in a complete reversal in these markets in an incredibly short period of time,” said Chris P. Caddell, president-elect, AACE International, and SVP at Turner & Townsend. “The hope is that as we develop treatments and practices to help deal with this crisis, the impact will be relatively short-term.”

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